It is widely agreed that incentives like discounts on road tax and no registration fees on new vehicles could convince people with old cars to send these to the scrapyard.
The ministry of road transport and highways (Morth) has reportedly proposed a slew of incentives which could be part of the long-pending vehicle scrappage policy in India. Although in draft from currently, it has been proposed that those who send their respective vehicles to the scrapyard and buy a new one can look forward to incentives such as no registration fees and a discount on road tax.
The proposed incentives were part of discussions during the 40th meeting of the transport development council chaired by Union transport minister Nitin Gadkari recently. The main idea behind the proposed vehicle scrappage policy is to take old vehicles off the road. These vehicles are often guilty of being not just fuel guzzlers but for polluting the environment due to the high level of vehicular emissions. Another benefit could be that some of the parts from the old vehicle may be recycled.
But why would an individual bring in his or her old vehicle in the first place?
Incentives to ensure that owners of old vehicles are convinced to 'trade in' for a newer vehicle are crucial for the success of any scrappage policy. One way is to ensure that newer vehicles are financially viable for such owners who may choose to become prospective customers. Additionally, a higher road tax on vehicles older than 15 years may also make it more cost-effective to actually purchase a new vehicle after making use of the proposed vehicle scrappage policy. "The objective behind the scrapping policy is to phase out older, unfit vehicles and replace them with safe, fuel efficient, environment- friendly, new- generation vehicles," the minutes of the recent Morth meeting reads. "Commercial vehicles cause higher levels of pollution due to higher mileage covered by them. Therefore, efforts are focused more on these vehicles .The Voluntary Vehicle Scrapping Policy is driven through a combination of incentives and disincentives."
Vehicle scrappage policies have been enacted in several western countries with varying degrees of success. It is also one way to ensure that vehicle manufacturers receive a boost because there would be newer customer in the market.